No pretty pictures this time. Just a few stark facts about the new Growth Management Ordinance that the Town Council is poised to approve at this evening’s meeting:
* A profoundly important decision — This is the most important decision any Town Council is likely to make in the next five years. It will have a profound impact on Scarborough’s future.
* Ordinance’s impact unknown — Despite its importance, its implications for the Town’s future growth are unknown. If there has been a meaningful analysis of what the ordinance will mean for the Town’s growth over the next five years, it has been well hidden. Isn’t the public entitled to understandable projections of the number of each type of housing unit and the related population growth by year over the next five years? While precise projections may not be practical, projections of best case, worst case and most likely case are certainly possible. Indeed, most would consider them required when considering a decision of this magnitude. Where are the projections?
* Exemptions for the Downs – As of the last publicly available draft of the new ordinance, there are three exemptions to the permit issuing rules specifically for the Downs. Doesn’t the public deserve an explanation of the implications of these exemptions and the basis for them?
* Flawed public process – Despite the protests of many Councilors that they have been hard at work on this ordinance for 16 months, much of that time was not particularly productive. And most members of the Town Council pretended not to hear the loud and clear message the public sent (via the survey, public comment and emails) that the pace of growth is too fast.
Within the past 4-6 weeks, a frenzied effort has been made to finalize a new ordinance. A good deal of that effort has occurred behind the scenes – and with a healthy dose of input from the Downs. It’s telling that the only information provided in the agenda for this evening’s meeting is a marked-up draft of the ordinance… which will be subject to amendments at the meeting, minutes before the final vote occurs. There is absolutely no analysis of what it means to the Town in terms of number and types of housing units and population growth over the next five years.
Doesn’t the public deserve a reasonable opportunity to review, question, understand and respond to the final proposal for this critical ordinance? In a well-functioning local government, the answer is obviously “yes.” We’ll see how the Scarborough Town Council answers the question later today.
If you want a chilling summary of where we are, you may want to watch this one-minute clip of Council Chair Paul Johnson’s summing up comments on growth at last Thursday’s workshop on the Growth Management Ordinance. Don’t miss that bit at the very end… “It’s a little scary for the next two years, I think…” Yes, indeed, many of us are very scared about the Town’s future growth. And we were counting on the Town Council to control it.
That’s all for now. We hope to report better news in the future! In the meantime,
[Blog name of Steve Hanly, who is solely responsible for the content herein]
Well, friends and neighbors, residential growth continues at a blinding pace in old Scarborough Town. But whether that pace is too fast, too slow or just right remains an open question. Heck, the Town can’t even seem to agree on what that current pace is, let alone what it should be.
This blog will examine where we think we are, how we got here and what we can do about it. We’ll try to eliminate the jargon and the red herrings.
But first, please take 60 seconds to check out this slide show for an overview of what residential growth in Scarborough over the last four years looks like.[Link here.] You may be surprised.
Where we are
Based on our review of various Town documents, we estimate that around 1,200 total housing units have been approved since 2017, bringing us to a total of about 9,500 total units now. (We wish we could be more accurate here, but if there’s a readily available source of reliable, consistent and comprehensive data on our housing inventory and growth prepared by the Town, we haven’t been able to find it.) This estimate appears to be consistent with the U.S. Census Bureau’s American Community Survey (ACS) estimate for 2019 of 9,233 housing units.
Here’s a summary of the Town’s “Total Units” approved over the period from 2011 to 2109:
(We wanted to include the 2020 numbers, or at least estimates of them, in this analysis. So we requested them from the Town last week. The response was they “will be working on this information.” How this very basic information about housing permits is not available more than three months after the year-end makes us wonder just what sort of system the Town has for reporting permitting activity.)
In any event, the recent explosion of housing is readily seen in the chart above, with the average number of units approved each year from 2017 to 2019 being three times that of the prior six years.
But never mind the abstractions; here’s some reality you can see as you drive around town… multi-unit housing projects approved since 2017:
Note: The above list does not include stand-alone single-family homes created outside of multiple-unit projects.
It’s also interesting to see a major shift in the mix of housing units has changed in the last few years. As will be discussed below, a change in the Town ordinances in 2008 made possible a huge shift in the mix of housing types. While single-family homes have long been the predominant housing type in Scarborough, a dramatic shift occurred between 2017 and 2019 as noted in the following chart:
While only 48 units were created in multi-apartment buildings during the six-year period from 2011 to 2016, a total of 613 units were created in multi-apartment building in the three-year period from 2017 to 2019.
What are the implications – positive or negative – of this dramatic change in the Town’s housing character?
How we got here
How we arrived at this level of scorching growth is a complicated story. Here is one observer’s condensed and highly subjective explanation of the factors that have caused the explosive growth:
* Town Manager Tom Hall has a bias toward fast growth. As the only consistent player in a Town governance structure that sees about one-third of the Town Council potentially turn over every year, the Manager is at the helm for the long term. He controls the decision-making data and uses it (effectively) to steer the Town Council along his desired course.
* The Town changed its “Growth Management Ordinance” – which is supposed to help avoid too-fast and disruptive housing growth – in 2008. The major change was to introduce the concept of “fractionalization” to the process of issuing housing permits. It essentially gave developers the leeway to build up to two one-bedroom apartment units in lieu of one single-family home. (As seen in the chart above, it “worked.”)
* Scarborough has been blessed, or cursed, depending on your viewpoint, with very savvy developers. Not only are they shrewd, but they have that intangible advantage of being “local boys,” or, as some refer to them, “Marco Island boys.” One of the shrewdest early moves of the brothers Michaud and Risbara was to hire away the Town’s Director of Planning, Dan Bacon, the person most familiar with the Town’s complex zoning requirements. It’s not good when the fox knows more about the henhouse layout and alarm system than the hens.
* Taxpayers have kicked in significant financial assistance to the developers by way of the tax break known as a “Credit Enhancement Agreement” (“CEA”). So the unwitting taxpayer is actually having his tax dollars used to fuel or “incentivize” this fast growth. In 2021, for instance, we sent the Downs $243,000 to help their bottom line. In view of the current level of construction activity at the Downs, their 2022 payoff will likely be much larger. It’s ironic that taxpayers have actually subsidized the torrid growth pace.
The politics of growth
A frequently used tactic in the debate on many issues at all levels of government is for one side to overstate or mischaracterize the other’s position. For instance, in the current Town debate over housing growth, some pro-growth individuals will characterize the “reasonable-growth” advocates as “anti-growth.” That’s just not a fair assessment of the position of many reasonable-growth advocates. It’s disingenuous at best.
Most Scarborough residents are not anti-growth. They just want reasonable growth that doesn’t urbanize the Town overnight. Do we want to become the commuter hub of Cumberland County where good access to the Turnpike and I-295 is the primary reason people decide to live here? Does that foster a sense of community? How much more pressure do we want to put on Route 1? What are the financial implications of excessive growth? (We just don’t buy the idea that the Town will grow its way to financial prosperity and affordable tax increases.)
Also worth mentioning is the motivation of some of the rapid-growth proponents. It seems that some of the most vocal members of that choir are in the local real estate, construction or development businesses. Hmmm. And don’t forget that Jean-Marie Caterina, the chair of the Town’s Ordinance Committee, which is responsible for the Growth Management Ordinance, is a Scarborough realtor. Yes, her livelihood involves the buying and selling of homes in Scarborough. Ahh, the appearances we create!
Lighting a candle
Longtime readers know that we at LookOutScarborough frequently curse the darkness of Town matters. But we also try to light a candle in that darkness whenever possible. In that spirit, here’s our list of suggestions for moving forward to finally address these issues in an informed, rational manner:
* Provide data on growth over the last ten years. Give the public meaningful data on how the housing inventory has changed – by type and size of structure (single family, apartment/condo, # of bedrooms) and by unit ownership (owner or renter occupied).
* Provide data on specialty housing types over the past ten years – number of units of senior housing, affordable housing, subsidized housing.
* Seriously solicit public input on growth preferences. Yes, a real, unbiased, widely-distributed survey. (A recent survey conducted by two Town Councilors indicated a high degree of disapproval of the current fast growth rate among residents.)
* Set specific, community-endorsed goals for future specialty housing. Saying – as we currently do – “we need more” senior or affordable/subsidized housing is not a meaningful goal! The goals need to be developed with an understanding of the region’s demands and resources. More importantly, the goals need to reflect Scarborough residents’ desires and willingness to pay for these desirable programs.
You, too, can light a candle
At the moment, the Town Council is in the process of rushing through very recently proposed changes to the Town’s Growth Management Ordinance (“GMO”). (What? Another rush job on a critical Town decision! Say it’s not so!) Fortunately, Town Councilor Betsy Gleysteen has prepared a concise and readable review of the proposed revisions GMO and its significant deficiencies.
If you are concerned about the rapid growth in Scarborough, please see Betsy’s review of the facts and how you can help. Here’s a linkto her review.We highly recommend it.
Two key dates are:
Wednesday, April 21 – Town Council public hearing on the GMO
Wednesday, May 5 – Town Council second reading (i.e., final vote) on the proposed GMO changes
Early Budget Warning
The first draft of the Fiscal 2022 budget has been announced. Unfortunately, it’s much like most recent budgets. The Town Manager and School Superintendent prepared outlandish budget requests, dumped them in the Town Council’s lap and told the Council to figure it out. This model never ceases to amaze us. In the real world, a CEO (i.e., Town Manager) who presented a budget that was so unresponsive to the Board of Directors’ request (i.e., the Town Council’s) would be picking up his final check shortly after submitting the budget.
Here, however, the Town Council and the public get to go at it for 5-6 weeks of heated arguments while the Town Manager plays the part of humble servant to the Council, sitting by quietly and observing the mayhem.
But enough philosophizing. Here are a few of the lowlights of the proposed budget:
Tax rate increase: 7.74%
Municipal expenses increase: 7.6%
School expense increase: 6.5%
Combined school and municipal capital expenditures: up by $6.8 million ($4.2 million to $11.0 million)
Additional debt to be issued: $8.6 million
The beat goes on. We’ll keep you posted as we dig into the gory details.
That’s all for now, folks. Challenges abound in Scarborough, as they often do. Be strong! Until next time,
(nom de blog of Steve Hanly, who is solely responsible for the contents above)
Click herefor a 60-second tour of recent Scarborough housing activity.
Well, friends, we made it through 2020, somehow. And the sun seems to be rising again every day in 2021. So onward we march! Spring and vaccinations are right around the corner.
But enough piffle. Let’s get right to the Scarborough news that you won’t see anywhere else – even though it was the lead story in the Leader.
Yes, if you saw last week’s Leader, you probably read about the Town dipping its toe into addressing the homeless crisis. But if you were like us, you found that the questions raised by the article significantly outweighed the information provided.
Actually, the Town has done more than dip its toe in the water of this issue – we have plunged into a pool of unknown depth with wild abandon.
But first, a quick summary of the facts that have been made available to the public:
* “A Scarborough hotel” is being converted into a temporary homeless shelter managed and staffed by the folks at Preble Street.
* The facility will accommodate 73 homeless individuals in the “emergency wellness shelter” and 41 individuals in the “quarantine and isolation shelter” (for homeless individuals affected by COVID-19).
* The project will be fully funded by MaineHousing, a State agency.
* The emergency wellness shelter (73 individuals) is “anticipated to operate through April 30, 2021,” i.e., through the end of the winter season.
* The quarantine and isolation shelter (41 individuals) “does not have a pre-determined end date, as it is in response to the current pandemic and an integral part of the public health response.”
There are two aspects of this story that are astounding:
First, the omission of a central fact to the story – which Scarborough hotel is being converted into the homeless shelter? How is it possible that the hotel involved is not named in any of the publicly available material on the project? And how can the Leader write a front-page story on the project and not name the hotel? Can this omission be accidental? Why was this key piece of information withheld?
The mystery hotel, it turns out, is the Marriott Fairfield Inn at 2 Cummings Road, at the intersection of Payne and Cummings Roads. More on that in a minute.
Second, the lightning speed with which this decision was made. During the discussion of the project at the Town Council meeting of January 20 [link here;start at 25:45], the Town Manager noted that he was first approached about the project “right before the first of the year, so a couple of weeks ago.” (He did not disclose when he made the members of the Town Council aware of the potential project.) And then — after a 25-minute public discussion at the January 20 Council meeting – the project was approved.
You are probably aware of the long and tortuous process that Portland has gone through over the past several years in coming up with appropriate locations for homeless shelters. Those discussions have literally lasted for years. Yet Scarborough can make a decision on its first homeless shelter in less than a month and after a 25-minute public discussion. The contrast is striking.
Yes, we understand that the current winter homeless situation is an urgent public health crisis and that unnecessary delays could cost lives. At the same time, the Town Council has a responsibility to thoroughly review proposals that impact the Town, and, in this case, the residents of the homeless shelter. Did that review occur?
Did the Town Council:
formally or informally conduct a site visit at the Fairfield Inn?
review the “Certificate of Local Approval” that it authorized the Town Manager to sign to allow the project?
review the agreement between Preble Street and MaineHousing on the project?
review the lease between Preble Street or MaineHousing and the owner of the Fairfield Inn (Giri Portland Mall, Inc. of Quincy, MA)?
review the transportation plan for residents staying at the shelter?
consider the Town’s role in responding to homelessness at the site and in general after the “temporary” project ends?
If any of these steps were taken, they weren’t mentioned during the Council meeting.
If anyone had visited the Fairfield Inn, he or she may well have had some serious questions about the suitability of the location for a homeless shelter. On a recent site visit, your editor observed the following about the intersection of Payne and Cummings Roads where the hotel is located:
There is no “Walk” light at the intersection of Payne and Cummings Road.
There are no crosswalks at the intersection.
There are no sidewalks at the intersection!
This is a fairly complex, high volume intersection. Payne Road is 5 lanes and Cummings Road is 6 lanes. It is decidedly pedestrian unfriendly. In fact, you take your life in your hands when trying to cross the intersection.
When one considers that some of the residents at the shelter may have multiple and complex barriers, including mental illness, substance use disorders, other disabilities or co-occurring diagnoses, one would have to be concerned that any resident trying to leave the property on foot and cross the street would be at an obvious risk of serious bodily harm or worse.
In its haste to respond to an emergency, the Town Council may have overlooked a serious deficiency of the shelter site. Although the deed is done, we hope the Council will re-look at this project and spend the appropriate amount of time and get meaningful public input on the future of this specific project and the Town’s overall response to the regional problem of homelessness.
The Old Cynic’s Corner
Let’s be clear, your editor fully supports the Town taking positive steps in dealing with the serious problem of homelessness in the region. At the same time, he is strenuously opposed to the Town Council making rushed and not fully informed judgments. Especially when those judgments can potentially have severe consequences for some of those impacted by the decision.
There seems to be a faulty thought process involved here. If a proposal deals with a serious social ill, it gets a pass (or at least less detailed scrutiny) from the normal review and vetting process. Because it’s a worthy cause, it is assumed to be a worthy proposal. Obviously nobody wants to appear to be against helping the homeless or any of our neighbors in need.
Any proposal to address homelessness will have a built-in emotional bias for approval. In reality, proposals of this sort should get more careful analysis and review to compensate for that built-in bias for approval. We shouldn’t equate a worthy cause with a worthy proposal.
That’s it for now, folks.
It’s a busy time in old Scarborough: a new “downtown” being planned, the Town Charter being reviewed, the Comprehensive Plan being finalized and the budget process beginning. No wonder the Town Council members seem harried… their plates are overflowing. We’ll do our best to keep you informed! So until next time,
(nom de blog of Steve Hanly who is solely responsible for the above)
As the saying goes, “never let a good crisis go to waste.” And what could be a better crisis than a pandemic!? So let the games begin!
Here’s our exclusive overview of a few current crisis-enabled schemes and developments that you probably haven’t heard much about…
Scarborough Schools Awash in Cash
Recall that the school budget for this year includes $534,000 of local taxpayer funds for pandemic-related costs. This was despite a general understanding that a Federal bailout was coming later in the summer.
The bailout did indeed arrive this fall, in two big payouts, totaling $4.3 million for Scarborough. There are two important requirements for use of that cash: (1) the funds can only be used for pandemic-related costs and (2) the funds have to be completely spent or committed by December 30, 2020, just a couple of months from now.
But fortunately requirement #2 plays to one of the schools’ great strengths – spending money. So we’re convinced there won’t be any trouble burning through the allotted cash by the deadline.
We are, however, a bit curious about just how pandemic-related some of the expenses are. For instance, remember that $250,000 heated shed for the new school dump truck that was finally (and thankfully) removed from the schools’ capital budget this past summer? Well, it’s probably just a coincidence, but there’s a $275,000 heated shed on concrete slab included in what we’re going to spend some of the $4.3 million of pandemic funds on. Hmmm….
And let’s not forget the $50,000 for water bottles associated with the $125,000 for the purchase and installation of bottle filling stations. That’s not a joke; those are included in our funding request. While we understand that traditional water fountains are no longer prudent, we wonder about the solution. (And this statement caught our eye: “To ensure equity, all staff and students will be provided with a refillable water bottle.”)
Of course, the real issue here has to do with ongoing expenses. It’s very easy to hire additional staff, lease space and enter long-term contracts when cash is pouring out of the Federal pandemic aid faucet. But who picks up the tab for those new expenses once the faucet is closed? Obviously, that’s a rhetorical question. Evaluating long-term consequences has never been one of the strong suits of the Town or schools.
Scarborough Teachers’ Union Asks for Changes
You may remember the difficulty we had learning the terms of the teachers’ contract before the budget was being finalized this spring. It ended up being an average 15% raise over 3 years (and we’re still waiting for the analysis of the financial impact of the contract). The School Board and union kept that deal quiet for months before the school budget vote. And after the contract was signed, the union was asked by the School Board to make salary concessions like many other Town and school employee groups had. The union declined to make even a token concession.
And we’ve just learned that the teachers’ union has now approached the School Board about a “memorandum of understanding” due to the special circumstances surrounding this school year related to the pandemic. What? An amendment to the contract that was not signed until June 22, well after the severity of the pandemic was apparent? You will not be surprised to learn that – since the School Board is now in negotiations with the union – the proposed contract modifications are all top-secret and the public has no right to know what’s going on in the negotiations.
Yes, the cone of silence has descended once again. We’ll only find out the results of the negotiations when the bill gets presented to the taxpayers.
School Enrollment Down, Not Surprisingly
Have you wondered what’s happening to school enrollments as our pandemic adventure continues? Here’s the scoop as of October 1:
K-12 total last year: 2,999
K-12 total this year: 2,928
That’s a reduction of 71 students, of whom 69 are homeschooling.
Source: School Department
Of the 2,928 students currently enrolled in Scarborough schools, 399 have elected the all-remote model. That leaves 2,529 on the hybrid model (2 days a week in school, 2 days a week remote learning).
We haven’t heard how many teachers have decided not to return to the physical classrooms.
Community Services Expansion
It seems like just yesterday that the Town Council approved a lease of the old House of Lights location (14,000 sf) as a site for an expanded childcare program in response to the pandemic. Come to think of it, it was just at the September 9 Town Council meeting that the presentation was reviewed and approved. Estimated annual facility costs alone are about $290,000.
The now-closed House of Lights on Payne Road
Now for the COVID twist… In the October 22 issue of the Forecaster it was publicly revealed (for the first time, we think) that “Most of the [Community Services] department’s staff that previously used space at Town Hall and Wentworth School has moved in [to the leased space]…” How strange that that administrative space expansion component of the use of the newly leased space was never mentioned during the discussion of the Town Council presentation. Just an oversight? Or a calculated way to take advantage of a crisis?
WEX Building at the Downs on the Back Burner (way back)
The WEX headquarters in Portland
We weren’t at all pleased when super-successful WEX held up the Town for a $150,000 per year rent subsidy in order to locate an office building at the Downs last year. Remember, that was in addition to the 40% of the taxes on the new building that we’d be paying to our favorite local boys (the brothers Risbara and Michaud).
Enter COVID-19. And most of WEX’s office workers are now working from home. Which obviously dampens the demand for new office space. Now the rumor is that the new Scarborough office building is on long-term hold. We can only hope this bad deal goes away forever!
Until next time
Well, friends, that’s as much news as we can share without being overcome by the fumes of cynicism and disbelief. We’ll work on some good news for next time!
Until then, stay safe, stay healthy, stay positive and above all…
(nom de blog of Steve Hanly, who is solely responsible for its contents)
PS: We apologize for the over-reliance on 60s TV shows for images this time around. But, hey, if a classic fits, you gotta go with it.
Did you catch Jean-Marie Caterina’s reelection ad in Friday’s issue of the Leader? Jean-Marie as a fiscal conservative??? We think not!
Ms. Caterina appears to be using the same canard (ruse, deception) attempted by former Councilor Bill Donovan in his reelection bid last year. He, too, dressed himself up in the clothes of a fiscal conservative, but that attire utterly failed to conceal his true big-spending ways. That Ms. Caterina is following the path blazed by Mr. Donovan should come as no surprise to those in town who recognize him as her soulmate, confidant and political guide. May Jean-Marie achieve the same richly deserved electoral fate as Mr. D. – last place and safely off the Town Council.
Here is a Councilor who consistently votes for proposals and “deals” that have cost all taxpayers dearly. She was all in for the $80 million tax break for the Downs and then the add-on $2.5 million tax break for WEX. (You remember the WEX deal… their CEO takes home $5.6 million per year and yet Scarborough taxpayers have to chip in $150,000 per year to lower their office rent. Boo hoo!) And the next time Ms. Caterina speaks out for reining in the school budget will be the first time.
She holds herself out as a champion of seniors by pushing for senior tax assistance. Unfortunately, this just creates another type of tax break that gets spread around for everyone to pay for – including hard-working families as well as seniors who don’t quite qualify for the assistance. Most seniors would prefer affordable taxes for everyone… that’s really the way to allow seniors to remain in their homes.
This is not the picture of a fiscally conservative Councilor! Remember, a vote for Caterina is a vote for (much) higher taxes.
Scarborough’s Growth Addiction
In case you haven’t noticed, Scarborough is growing like billy-o. Our Town leaders have been talking about it for quite some time now, but not much appears to have happened to address it. We are, as a Town, addicted to growth.
So, other than the obvious row after row of nondescript apartment buildings that are sprouting up all over the place, is there any hard evidence of the apparent growth spurt? Indeed there is.
The first Assessor’s Report by the Town’s new Assessor, Nick Cloutier, is a breath of data-filled fresh air. It’s only a couple of pages long, but it provides real insight into the Town’s assessed value changes and totals. (The report may be found at pdf pages 3-4 of the agenda linked here.)
In the report, you will see that the gross valuation growth of all property in Town (residential and commercial) was $100 million in the 12 months ended April 1, 2020. That compares to typical growth in the $30-45 million range in the years just before our revaluations. (We don’t know what growth related to new construction was during the two revaluation years because, unfortunately, it wasn’t separated from the revaluation impact.) So last year’s growth was more twice that of the recent past. It’s not just your imagination… we’re growing faster than ever. And there’s no end in sight.
How do we deal with this growth addiction? Well, if we decided to follow a 12-step program, step 1 would be to acknowledge we have a problem. So far, Town leaders can’t even bring themselves to that crucial acknowledgement. Let’s hope they do something soon to stop this out-of-control growth. There are two opportunities to deal with the issue: (1) revise the so-called Growth Management Ordinance and (2) put some strong guidance limiting growth in the Comprehensive Plan that is currently being wrapped up (after 3 years). Yes, it sounds like incredibly dull stuff. But if we don’t pay attention, we’ll be the City of Scarborough any day now.
There is only one Town Council candidate who really gets the growth issue — Nick McGee. From his years on the Planning Board, he knows exactly what’s going on and how to put some commonsense controls on our growth addiction. He’s getting our vote. In fact, even though there are three openings on the Town Council, we’re only voting for Nick. There’s absolutely no need to vote for candidates who won’t support your positions! A vote for just Nick improves his chances of being elected.
The Downs to the Rescue!
Speaking of runaway growth… Besides Ms. Caterina’s amusingly disingenuous political ad, this week’s Leader had another noteworthy feature – a front-page “story” about how the Downs is soooo good for Scarborough. In fact, this was the second front-page article on this subject in the last six weeks. And when we say “article,” we mean public relations blurb, pure and simple. No questioning of what was presented, no opposing views… just a showcase of what “the local boys” want Town residents to know.
This latest puff piece is a corker. It’s allegedly a financial analysis of what the Downs means to Scarborough. Astute readers will recognize that it’s really a projection of what might be achieved – if you believe the Downs’ math – through the end of 2023. It’s what the local boys project is going to happen over the next 3-plus years. Who knows what the economy and real estate market will look like next year or the year after? Given the events of the last seven or eight months, this is not a great time to be in the crystal ball business.
The fact that the analysis is largely a 3-year projection is bad enough, but the math behind the projection is really awful. The report follows the same flawed methodology that the Downs used to sell the $80 million tax break to four members of the Town Council back when the $80 million tax break was approved a couple years ago. It attempts to calculate the net tax benefit to the Town of various types of properties. So, for instance, a retail store will supposedly only incur incremental costs associated with police and fire protection. Since the real estate taxes on the store are well in excess of those incremental costs, retail stores are a big financial winner. Conversely, single family homes, with the high cost of educating the children that come with them, are a huge financial drain compared to the amount of taxes they generate.
(The report, paid for by the Downs, is at pdf pages 5-18 at this link.)
There are at least two major flaws with this type of analysis:
(1) The methodology fails to consider all relevant costs. This methodology ignores huge swaths of overhead expenses (debt, for instance) which are ultimately impacted by the development. Also, looking at incremental costs as opposed to full costs will always present a rosier short-term financial result than the realistic long-term full-cost impact.
(2)The methodology is inconsistent with fair taxation. Essentially the incremental return on investment model allows certain properties to make net tax contributions that are less than those of others based on the services those properties theoretically use. This net tax contribution based on a pick-and-choose your expenses concept is unsound. A logical extension of its application would be that households in single family homes with no kids in school should pay taxes at a lower rate than those households with kids in the Scarborough schools. That concept would offend most residents… but a close variation of it is the basis for the “significant fiscal benefit” described in the developer-sponsored financial analysis.
And finally, there’s the matter of what’s not said in the analysis. It asserts that the Town will receive $5.2 million in new taxes over the life of the analysis. But what it fails to note is that $3.4 million of tax revenue that otherwise would have been available in the Town budget for municipal and school services over the period will instead be paid to the developers. Remember this $3.4 million of foregone tax revenue at budget time next year when the schools make their annual threat to save $60,000 by eliminating middle school sports.
Call us suspicious [it won’t be the first time], but this flurry of promoting how-good-the-Downs-is-for-Scarborough makes us very uneasy that we’re being softened up for the next big tax break for the local boys at the Downs. You heard it here first.
That’s all for now, fellow travelers in this topsy-turvy new world. Make sure you vote on or before November 3. In the meantime, be healthy, be safe and most of all…
(Nom de blog of Steve Hanly, who is solely responsible for the content above.)
Friends and neighbors, we hope you and yours are healthy and safe as we navigate through the choppy and uncharted waters of 2020.
If you have lived in Scarborough for a couple of years or more, you certainly know that the town/school budget process is a full-contact sport. This year has been particularly bruising, especially in contrast to last year’s quiet season. The budget process began in January and will culminate in the first vote on the school budget on July 14. Look for a second vote in mid-August.
You will be forgiven if you have not paid close attention to the hours upon hours of finance committee meetings, various Town Council and School Board budget “workshops” and the actual Council and School Board meetings. In addition to being long, sometimes baffling and sometimes inconclusive, they have also been acrimonious and combative at times.
And good luck to you if you were trying to keep abreast of what was going on without watching all the meetings! It just couldn’t be done. The discussions were so convoluted and exhausting that the local press basically gave up on reporting on the budget until it was finalized at the June 24 Town Council meeting. Well, then, how about going to the Town’s online “budget portal” to find out what was in and what was out of the final budget? Forgeddaboudit!
So that’s where LookOutScarborough comes in! In the next ten minutes (seven, if you skip the snarky parts) you will have a good summary of the Fiscal 2021 budget and have an informed basis for voting on the school referendum on July 14.
After all was said and done, here’s a very condensed summary of how much taxpayers will kick in next year compared to this year:
Amount of Tax Dollars Required — Fiscal Year 2020 and 2021
The bottom line of required tax dollars translates into a tax rate increase of 1.24%. As you can see, the municipal operating and capital budgets achieved a 1% decrease compared to last year. Town management took the financial needs of taxpayers seriously. Among the steps taken to reduce the budget were voluntary salary reductions by some Town employees, temporary work hour reductions through the Workshare program for other employees and significantly reduced capital requests.
Compared to the municipal tax burden decrease of 1.0%, the school operating and capital budgets require a 2.6% increase in taxpayer funding next year. Obviously the no-limits folks were in charge of putting together and pushing this year’s school budget.
While some may be tempted to say, “Hey, a 1.24% overall increase in the tax rate isn’t so bad,” we believe a ZERO % increase – or, perish the thought, a decrease – would have been much preferable in light of the pandemic-related financial challenges and uncertainties taxpayers are facing. You know, unemployment, reduced work hours, loss of income, loss of businesses. Not to mention last year’s property tax increaseswhen 60% of homeowners received a tax increase of 10% or more due to the residential revaluation.
And a ZERO % increase could have been achieved if the schools had done their part.
The school budget in perspective
When the school administration and School Board fail to take into account the needs of the residents who ultimately pay the bills, you get a budget like this. There was no consideration of where the money was coming from. To those who developed this budget, the taxpayers are a faceless money machine that never runs dry.
As noted in the chart above, the proposed school budget requires taxpayers to put up $1.2 million or 2.6% more in Fiscal 2021 than in Fiscal 2020. Here are three facts – which you probably won’t see mentioned anywhere else – that make that somewhat reasonable sounding number very questionable:
First, that 2.6% increase is after the State kicked in $760,000 more education aid to the schools this year.
Second, to get to that 2.6% increase, the School Board used $700,000 of “reserves” or fund balance. Without that infusion of reserves (which will be gone and not available next year), the total taxpayer funding of the schools would have increased by 4.1%.
Third, despite much wailing and gnashing of teeth about numerous positions being cut during the discussions, we don’t believe the staffing level from Fiscal 2020 to Fiscal 2021 declined at all. Indeed, if our review of the data is correct, there was a net addition of four positions in the Fiscal 2021 budget. (Please note that our review was done on a best-efforts basis and its accuracy cannot be confirmed. At some point we hope that the schools will provide an analysis of the FTE changes. Perhaps someone with influence with the School Department can request that analysis. In the meantime, take our estimate with a grain of salt.)
The teachers’ contract – deafness, delay and defensiveness
Geez, we thought we had a School Board that valued sensitivity to the entire community, transparency and communication. Well, maybe not as much as we hoped.
So why did the schools’ requirement for taxpayer dollars go UP by 2.6% while the municipal requirement went DOWN by 1.0%? Two words: teachers’ contract.
DEAFNESS: As we correctly estimated two months ago, the three-year teachers’ contract calls for a 15% pay increase over the life of the contract. That includes an average salary increase of 4.8% as of September 1. And when you consider that the salaries and benefits of teachers and other professionals included in the contract account for more than half of all school operating expenses, it’s quite easy to see why the tax requirement of the schools increased so much.
We are amazed that the School Board could approve a contract with that level of salary increases. How many Scarborough taxpayers are expecting their salaries or incomes to increase by around 5% per year? Did the Board ever consider the taxpayers’ ability to pay? Did they even ask themselves those questions?
We understand that much of the negotiating of this contract happened before the impact of the pandemic was understood. But the contract was not ratified by the teachers’ union and the School Board until well after the financial calamity of the pandemic was understood. There was time to adjust the salary increases to a more reasonable level that was consistent with the community’s financial situation.
DELAY: In addition to ignoring the financial situation of the taxpayers, the School Board did their best to keep the results of the teachers’ contract under wraps as long as possible. For instance, at the very end of the process after both parties had ratified the contract, it took them 18 days to affix signatures to the formal contract. Seems like an unnecessarily leisurely schedule to us for a document that is the largest single driver of expenses in the combined municipal/school budget. (Despite the very laid back execution schedule, there’s a glaring typo on the heading of the column of salaries for the third year of the contracton page 30.)
The salary increases were unseemly at best; the longer they could be kept out of public discourse, the better. We understand that the contract negotiation process is not a public one. But we can also tell when information that should be made public is being slow-walked (with the help of the taxpayer-paid legal firm) through the process to delay public announcement of the startling results of the teachers’ contract.
DEFENSIVENESS: Finally, after the pressure to release the contract to the public became too great, the School Board posted the contract – without any analysis that would make its financial impact meaningful – to the School website on June 22. They followed up with a classic posterior protection move (CYA) by announcing on June 25 that they had reached out to the teachers’ union to explore concessions. Oh, great! After the contract is signed – when you have ZERO leverage – you go through the motions of asking for concessions. Sorry, that doesn’t feed the bulldog!
For the record: Your editor highly respects and values the Town’s teachers and their importance to the community. He wants and expects them to be well paid. At the same time we must consider those who pay the salaries — the taxpayers. In a world of limited resources, the reality is that we have to balance the impact of expenses for school and municipal services with the amounts residents can afford.
Final Exam (counts 100% of grade)
The school budget process is conducted on a pass/fail basis. The School Board has completed the budget and submitted it to us, the voters, for grading at the polls on Tuesday, July 14.
For the reasons cited above, it’s clear to us that the School Board failed to prepare a budget that appropriately responds to the community’s needs. Please vote NO and send the budget back to the School Board. Make them come back with an honest, gimmickless, threat-free budget that responds to the needs of both the schools and the larger community.
Please get out there and vote — early voting at Town Hall on Mondays, Wednesdays and Fridays through July 13 is quick, easy and safe. Election day is Tuesday, July 14; voting is at the High School from 7am until 8pm.
That’s all for now, folks! Look for more thrills and spills ahead!
Take good care and be neighborly, now more than ever,
(nom de blog of Steve Hanly who is solely responsible for the blog’s contents)
Well, friends and neighbors, here we are. That’s about all anyone can say with confidence right now. Where we will be tomorrow is anybody’s guess. But that’s our task at the moment – making rational, informed guesses. And doing that in a positive, hopeful manner. While acknowledging the reality of the situation, we need to relish the hopeful signs that are springing up… like take-out fried clams at Ken’s.
Scarborough teachers assemble outside Town Hall on December 5 before making a noisy entrance to the School Board meeting.
FY21 Budget – business as usual?
But enough philosophizing. On to the cold, hard realities of the Fiscal 2021 budget season! As is usually the case, the Town Manager and School Superintendent have presented “first reading” budget proposals that made taxpayers blush. Wait, maybe the taxpayers weren’t blushing, maybe they were enraged.
Granted, the original budget proposals were developed prior to the COVID-19 pandemic. But still, coming in with an initial budget proposal that would increase the tax rate by 5.6% seemed ridiculously high. The Town Council agreed and, recognizing the potential impact of the pandemic, sent the budgets back for a re-do.
But the Council’s consensus target for a new tax rate increase is 2%! Be still my beating heart! All the way down from the usual 3% increase to a 2% increase! How much difference will that token reduction mean to the thousands of Scarborough taxpayers who have been laid off, had their hours cut, had their self-employment income reduced or seen their retirement savings decimated?
Perhaps Scarborough should follow the lead of many other towns and cities in the area and keep the tax rate unchanged or – please make sure you are seated – reduce it.
Teachers’ contract update
And then there’s the teachers’ contract. That contract — which by itself accounts for more than half of the total school expense budget — expired without a replacement contract on August 31, 2019, despite the fact that negotiations on it began early in 2019. We understand there was a tentative agreement on a new contract in late February, 2020. But the teachers’ union hasn’t voted to ratify the contract yet, citing the pandemic. (Ever hear of mail-in voting, guys?)
So what’s the new contract look like? Well, that’s a closely guarded secret until the teachers approve it. And that’s probably why they haven’t voted on it yet – they don’t want the public to know just how rich the salary increases are before we vote on the school budget. The union leadership is probably afraid that the public will be so incensed by the salary increases that the school budget referendum will go down in flames. And they’re probably right!
Our estimate is that teachers will get a 15% salary increase over the three-year contract period. Again, the details of the contract are shrouded in secrecy, so we can’t be certain of the amount. All we can do is make an educated guess based on publicly available documents. We hope we’re wrong, but we don’t think we are.
If we’re correct, that means annual increases of 4.5% to 5% for the next three years. We thought those increases were outrageous even before the current national crisis. In today’s world, they look just plain greedy.
It’s not too early to mark your calendar – the school budget referendum is scheduled for July 14.
More untimely tax burdens coming soon?
And speaking of insensitivity to the financial plight of the Town’s taxpayers, how about those three big-ticket items that are poised to go from concepts to real tax burdens:
New Primary School
“Community Center”/Athletic Facility
As many of you already know, major capital projects in Scarborough usually have a life of their own. Once the ball starts rolling, it rarely is stopped. So the most prudent approach is to assume a project is moving ahead on schedule unless there is definitive word that it has been stopped or paused. All three of these tax-busters are currently bubbling along in the background with little or no official comment on their status. But until somebody says, “it’s not happening,” the safest bet is to assume that it is happening. That’s just the way things work.
Here’s an update on the three biggies, based on what we have been able to determine:
Eight Corners School, one of the three neighborhood schools to be replaced by a consolidated school.
#1 New Primary School:$60 million? $75 million? Do I hear $90 million? Planning for the new consolidated primary school continues apace. The FY21 budget includes an additional $375,000 for pre-construction/long-range planning. The new school building is expected to be on the ballot this November – price currently unknown, but huge.
#2 Library Expansion: $12 million.Planning for doubling the size of the library continues. The Town Council got the latest expansion pitch at a workshop on April 15. And the FY21 budget currently includes $350,000 for design work and costs of a fundraising campaign. Look for the $12 million library expansion on the ballot this November.
#3 “Community Center”/Athletic Facility:$108 million lease commitment over 40 years. And who knows what additional amounts we’ll be on the hook for. Remember, this started as a community center and somehow morphed into a multi-sport athletic facility. An ad hoc committee reviewed Risbara’s proposal for a community center based on the developer’s assertion that he could save us money compared to what it would cost the Town to build the same facility. Wrong!, according to the ad hoc committee. So when it was clear that proposal was a loser, the developer came back with another, even more frightening one. It calls for a 40-year Town lease of the building for about $108 million. And don’t forget, since this is a lease, we won’t have to vote on it like we would if the Town built it and issued debt for it. So just four members of the Town Council could make this happen at any time. Be prepared, folks!
So there you have it – financial chaos all around us, but the pause button has not been pressed on any of these projects. Or if it has, nobody is talking about it publicly. Keep an ear to the ground on these potential budget busters.
And now for something completely different…
One of the suggestions that comes to us frequently from loyal LookOutScarborough readers is to include a bit of highbrow content in the blog. Food for the soul, as it were. And when our readers ask us to jump, we reflexively respond, “how high?” So we are pleased to oblige and hereby introduce…
We are proud to begin this occasional feature by highlighting a recent book of poetry, On Higgins Beach, by Scarborough poet Ann Hammond. In twenty poems Ms. Hammond captures the spirit of the beach, its diverse moods, its majesty and the myriad ways in which it links the elements of the natural world with our humanity. As Toronto-based poet Molly Peacock wrote: “This poet’s vigorous and strong-minded poems track her pursuit of understanding through observing the world and its minor miracles…”
We thoroughly enjoyed “Great White Pyrenees on the Beach” and “Towels and Chairs.” But we must confess our favorite verse is “Feathers and Paws,” a heartfelt exploration of that complicated beach relationship between man’s best friend, the dog, and the piping plover (a bird of very little brain, as Pooh would no doubt have put it). The poem begins:
“Golden plover on toast,” was offered
on the first Titanic breakfast menu.
We thank Ann Hammond for her insights and inspiration. Higgins Beach and all of us who treasure it are better for her work.
That’s all for now, friends. Expect the usual thrills and spills as the budget process continues. We’ll be there for you, clapping bricks against our heads and shouting, “my head hurts!” After that, of course, we’ll let you know what’s going on…
Stay well and, for God’s sake, be neighborly!
(nom de blog of Steve Hanly, who admits to any errors or offenses committed above)
At the School Board meeting on February 27, the issue of the mural of a Native American chief on the wall of the Plummer Gym surfaced. An unnamed person apparently asked the superintendent whether the portrait complied with Maine’s newly enacted anti-Native American mascot law. The superintendent referred the inquiry to the School Board.
At the Board meeting a lawyer from the schools’ legal firm (Drummond Woodsum) reviewed the new law, noting that the portrait in question does not violate the new law. She added that in her opinion it may violate the “spirit” of the law. She concluded that any action on the mural would be a policy matter and not a legal one. Members of the School Board suggested that the high school community and the community at large should engage in a discussion of what action, if any, to take with respect to the mural in question.
The context is important!
From the late 1930s until 2000, Scarborough High School’s mascot was the Redskins. After a spirited community discussion, the mascot was changed to the current Red Storm in 2001.
At the time the decision was made, the Plummer Gym mural was specifically addressed. There’s a small plaque next to the mural. You need to know what’s on that plaque to understand why the mural waspurposely not removed at the time of the mascot change. Here’s the text of the plaque:
“This mural depicts Scarborough High School’s mascot from the 1930’s to 2000. In 2001, the mascot was changed to the RED STORM. This mural remains in the gym in honor of the artist, Mr. Robert Scammon, a long time teacher at Scarborough High School who painted two such murals. One can be found high on the wall above the ceiling in the old gymnasium, which is now 101. This mural will remain as a testimony to Mr. Scammon’s talents and his commitment to the students of Scarborough High School. January 2002”
So Mr. Scammon’s mural has endured for nearly twenty years after the retirement of the Redskins mascot – as a tribute to his dedication to the students of Scarborough High School. For twenty years this symbol of the past has served two purposes without rancor – to honor a dedicated educator and to remind us of an earlier time and its values.
“Those who cannot remember the past are condemned to repeat it.”
This 1613 map of the Saco Bay area by Champlain shows much Native American activity in our area at that time.
Scarborough has a long history of interaction between indigenous people and the early European explorers and settlers. Some of that history is messy. (There is, for instance, a real event that gave rise to the name of Massacre Pond.) But trying to erase history is the easy and dangerous way out. A far better approach is to know the history, understand it and learn from it. Let’s hope the Town comes together for a rational and civil discussion of this matter.
Public comment invited
School Board members invited public input on the mural. We’re not sure how that input will be solicited, but one very direct and easy method is to send an email expressing your feelings about the mural to the School Board members. One email address will send your message to all members of the Board: email@example.com. Please take a couple of minutes and let your voice be heard.
Note to the Language Police:
“Powwow” is a good, honest, hard-working word. It, like many other words, came from another language and culture. To reflexively label every word — or image — of Native American origin or reference as “cultural appropriation” and consign it to the scrap heap of political incorrectness is not an intellectually meaningful or helpful exercise. Like society, language evolves over time. Let’s not strip it of its vibrancy based on the rigid, self-righteous judgments of self-appointed cultural guardians.
Much more to come
That’s all for now, folks. There’s much more to come as budget time is upon us. At the last School Board meeting it was also announced that an agreement in principle has been reached with the teachers’ union. Based on the preliminary numbers that have been made public so far, be prepared forsticker shock.
Also, we have added a Facebook page to our communications tools. Please check out the page and like it —here’s the link.
In our last blog we filled you in on the $2.25 million tax break (aka “Credit Enhancement Agreement” or “CEA”) that WEX has sought from the Town. The Town is being asked to pay WEX $150,000 per year for 15 years for a total of $2,250,000. Actually, since the developer will be paying the taxes on the property, the Town will probably be cutting a check payable to WEX each year. So it’s more like rent subsidy payments to WEX that the taxpayers will be making over the next 15 years.
And remember, this proposed rent subsidy payment is in addition to the $80 million tax break the Town gave to “the local boys” last year to develop the Downs property. Little did we realize that that $80 million was only the beginning… the WEX CEA is just the first of the “extras.”
Not getting the tax break/CEA is NOT a deal breaker
The main argument for giving WEX the $2.25 million tax break is that it if they don’t get it, they don’t come to Town. They go to SoPo. In other words: no tax break, no WEX. While that may have been the case earlier in the negotiations, it is no longer the case.
Here’s why. In the January 23 Press Herald story, WEX’s head of real estate noted that the tax break was “a potential deal breaker,” not that it was a deal breaker. Subsequently, it has been reported that the developer of the WEX building (Center Street Partners) has entered into a construction contract with Landry & French to build the $50 million facility. Here’s the linkto that story.
Now for that to happen, the developers had to have agreed to a lease with WEX. In a case like this, a developer won’t enter into a construction contract without a lease in hand. And since Scarborough has not authorized the CEA/tax break, that tax break clearly cannot be part of the lease arrangement that WEX has agreed to. QED. Scarborough’s granting of the tax break to WEX is not required for WEX to come to Scarborough. They are coming with or without the tax break.
So if the tax break is not required for WEX to come, why are we still talking about giving them one? Just to be nice guys? As a welcome gift? From the taxpayers of Scarborough to the shareholders of WEX? So they can “feel the love from the town,” as developer Roccy Risbara put it? Cut it out! We can think of many much less costly ways for the Town to show WEX the love!
WEX, the good corporate citizen?
Here’s a statement from WEX’s website about their relationships with the communities they are in: “At WEX we act as stewards of our communities. We have a long history of giving back, engaging with local organizations, and ensuring sustainability in our philanthropic endeavors.”
But apparently, in Scarborough’s case, their generosity only kicks in after they have shaken down the taxpayers for a rent subsidy. This is just weird.
(a) “a drop in the bucket,”
(b) “peanuts” or
(c) “chump change.”
One of the least persuasive talking points from the Downs crew is that the $150,000 per year rent subsidy (or $2.25 million in total over 15 years) is just chump change for the Town considering what we’re getting. Perhaps. But to us, that $150,000 is still a couple of teachers or emergency responders. And given the financial challenges the Town will face over the next few years, that $150,000 each year will loom even larger.
(Also, let’s not forget some previous heated debates over much smaller amounts of money, like the great beach raking controversy of 2018 and the inability to pay for the postage to send out revised property cards in connection with the residential revaluation. Both of those issues involved less than $10,000 but were characterized as budget busters.)
Here’s another way to put that $150,000 into perspective. Let’s see how much $150,000 is as percentage of total expenses for the Town and for WEX:
Based on the above you could argue that, comparatively speaking, $150,000 means 15 times more to the Town of Scarborough than it does to WEX. So if $150,000 is a “small amount” to the Town of Scarborough, it’s an infinitesimal amount to WEX. Which of those two entities is better able to absorb this “drop in the bucket?”
And speaking of big numbers…
WEX employees are the second and third highest paid execs in Maine’s public companies…
A Greeting Card for WEX
Somehow Scarborough now finds itself in the position of voluntarily providing a $150,000 per year rent subsidy to one of Maine’s most successful companies. If WEX can’t afford the rent, they should hash it out with the developers/building owners. The taxpayers of Scarborough should not be involved. We should not be chipping in even one thin dime to support this corporate welfare scheme!
What’s next on the proposed WEX tax break
The Town Council will be having a public hearing on the tax break for WEX on Wednesday, February 5 at 7:00 pm in the Council chambers. All members of the public are cordially invited to share their thoughts on giving WEX $2.25 million as an inducement to come to Scarborough. Remember, you don’t have to be a polished orator to speak; in our experience, the “plain speakers” are often more persuasive to the Council members.
Also, the Town has announced a “Community Round Table” on the WEX CEA to be held at Town Hall on Thursday, February 13, at 6:00pm. According to the Town newsletter: “There will be a brief presentation to share the what, who, and how of the proposal and then the floor will be open for resident questions and comments.”
Finally, the Town Council’s “second reading” or final action on the proposed tax break is currently scheduled to take place at the Council’s meeting on Wednesday, February 19.
So there are still good opportunities to learn more about and express your opinion on the proposed tax break.
But even if you aren’t the meeting-attending type, please let the Town Council know how you feel about the proposed WEX tax break. It really is simple and your opinion does matter! One email address sends the same message to all the Town Council members: firstname.lastname@example.org.
If you have read this far, you probably care about the WEX tax break one way or the other. So please take the 2-3 minutes needed to send a brief email to the Town Council sharing your opinion right now.Scarborough is your Town, too! Share your opinion! Thank you!
That’s all for now, folks. Happy trails until we meet again!
(nom de blog of Steve Hanly, who is solely responsible for the blog’s content)
Happy New Year, Scarborough friends! Strap yourself in for another wild ride on the Tilt-A-Whirl that is life in Scarborough.
And you thought that last year’s $80 million tax break for the Scarborough Downs developers was the end of the story. Ha! How wrong you were! The “local guys” are back again – this time they brought along a wealthy accomplice – trying to hold up Scarborough taxpayers for another $2.25 million. Read on for the details of the latest heist…
For those of you who may have forgotten (or tried to forget) the details of the last Town Council’s generosity to local guys Risbara and Michaud… The deal was essentially that the Downs developers would get 40% of the taxes on new property value created at the Downs. That amounted to a tax break of $80 million over 30 years, give or take a few million. One of the things that the Town was supposed to get out of this tax giveaway was about 1,900,000 square feet of new non-residential construction. But not so fast.
The gist of the new grift is that the Town now needs to give an additional $2.25 milliontax discount in order to induce the construction of a 200,000 square foot office building by WEX, a high-flying Portland-based financial/tech company. WEX will get a rebate of $150,000 per year of their tax bill for the next 15 years. Think of it as a kickback or signing bonus. (Remember that nice tax break the Town gave you when you bought or built your home? What, you didn’t get one?)
In short, the WEX deal means $2.25 million more tax dollars will flow into corporate pockets rather than into Town or school support.
[Editorial Note: Images and words such as “holdup,” “heist” and “kickback” are used strictly in the figurative sense. There is no suggestion that there is anything illegal or improper in the proposed transaction. It’s all just good, clean business!]
How the Tax Break Will Work
WEX is planning to build a $50 million operations center at the Downs…right next to the proposed community center (i.e., pool). At the current rate and the Town’s estimated assessed value of $45 million, that should generate $662,000 of tax revenue for the Town in the first year. Sounds wonderful, doesn’t it? But let’s see where that $662,000 ends up going based on the two “CEAs” or “credit enhancement agreements.” (CEA is just the polite name for this type of tax break.)
If WEX were a “normal” taxpayer, they would pay the Town $662,000 of taxes in the first year. But when you apply both tax breaks, the Town will end up getting only $247,000. That’s a reduction of $415,000 or 63%! Welcome to the world of high finance!
Also, let’s not lose sight of the fact that the annual $150,000 tax break is equivalent to the salaries of a couple of teachers or first responders.
Remember the old joke: “We lose money on every sale, but we make it up on volume.” This CEA would be funny if it didn’t have a real impact on our taxes.
So what do we know about WEX? Well, the company started in 1983 in Portland as a pioneer in the fleet (i.e., trucking) credit card business and has been astonishingly successful since then. It is now “a global leader in financial technology solutions.” It is Maine’s third largest publicly held company (based on revenues) with an enviable financial track record. Here are some of WEX’s recent financial highlights:
Does this sound like a company that needs a “helping hand” from the taxpayers of Scarborough? Not to us!
And, by the way, WEX just opened a new world headquarters building in Portland last year. It’s about 100,000 square feet, with a harbor view and lots of goodies as described in the following excerpt from one of their PR pieces:
This is NOT an image from a WEX wellness room.
“On each floor, our employees can find at least one kitchen/break room stocked with free coffee and healthy snacks as well as small, private wellness rooms dedicated to whatever wellness looks like to our employees, whether they be for meditating, nursing mothers or just grabbing a few minutes of quiet. Employees will also enjoy amenities including a rooftop deck (once the snow melts, it will be fully furnished and wifi-enabled)…” To get the full effect, visit WEX’s blog post about the new headquarters at this link.)
Sounds rather posh, doesn’t it? And yet somehow WEX can’t come up with enough scratch to pay their taxes at the same rate that all Scarborough residents and most businesses pay? What are we missing?
The arguments you will hear…
The combined WEX/Downs/Town public relations machine is, naturally, working overtime on this fantastic “opportunity” for Scarborough. (If we had a nickel for each superlative describing the company and the deal, we could retire from the blog business… much to the delight of many.) Please don’t get us wrong – WEX is a terrific company and solid corporate citizen and would be a welcome addition to the Town’s business landscape. But putting the squeeze on Scarborough taxpayers just doesn’t seem like a neighborly way to begin a relationship.
Here are some of the talking points that have been ginned up so far:
Sure, WEX is a great company with a wonderful reputation. Having them come to Scarborough would certainly be a positive for the Town’s attractiveness to businesses. But what savvy developer/business owner isn’t going to ask for the same favorable tax deal that WEX received? And are we going to say no? If we say no, on what criteria will that decision be based? Yes, we may have “only” given away $2.25 million to WEX, but the tab will be much, much more when we’re forced into future similar tax breaks for other businesses. We are essentially giving away a huge chunk of the favorable revenue-to-cost ratio of commercial property over residential property.
By the way, did the new Foley’s Gym on Haigis receive a tax break? If not, is it too late for him to go back and ask for a 23% tax reduction? (Which reminds us… have the Edge/Downs folks asked for their CEA for the new downtown sports complex yet?)
Yes, lots of jobs. But why is that such a great thing? Oh, right, it makes us a “vibrant” and “fast-growing” community. Neither vibrancy nor fast growth will do much to keep your taxes in check, despite claims to the contrary. In fact, “vibrancy” may just be one of those marketing terms that really means “increased traffic congestion.” And the Town’s fast growth over the past decade doesn’t seem to have solved our persistent budget problems.
Another thing… have you noticed a lack of jobs in Scarborough lately? Are there lots of unemployed folks hanging around that we have somehow missed?
Perhaps. But is that a major issue? There are other companies out there. The idea that some have suggested that the land where WEX is going may otherwise sit idle for years and years seems far-fetched. The Downs developers have consistently touted what a fantastic location the property is.
WEX agreed saying they evaluated the Downs and several competitive sites with respect to “an accessible location near major highways, a campus setting with on-site amenities and expandability for future planned growth.” WEX concluded: “The Downs surpassed all criteria and we were quite impressed with the master plan and offerings.” In other words, the Downs is a premier business location. It should not need massive incentives to be developed!
The developers have already received $80 million in commitments to, among other things, provide the Town with 1.9 million square feet of non-residential buildings. But apparently that was just the first installment. How many more millions of dollars will be diverted from supporting Town and school needs to lining the developers’ pockets? There’s a fuzzy line between encouraging legitimate economic development and making corporate welfare payments. Does the WEX deal cross the line?
Maybe we are naïve, but we really thought the current Town Council was serious about transparency and actually listening to the citizens on major issues. Yet here we are, after who knows how many months of non-public discussions, being presented with a tax break proposal that has all the earmarks of a done deal.
In fact, the credit enhancement agreement was apparently viewed as so certain that neither WEX nor the Downs (nor the Portland Press Herald) felt the need to mention its existence when the deal was announced. Not sure how they could have come to that conclusion without strong assurances from some Town officials that approving the agreement was a mere formality, perhaps with a small bone of faux public input thrown to the witless populace.
Well, folks, now it’s our chance to show them what a real public discussion is like!
What’s next with WEX?
>>> Wednesday, January 22 at 6pm, Town Hall — Town Council Workshop on the WEX deal. The propaganda package for the workshop is available on the Town website. Here’s the link.
>>> Wednesday, January 22 at 7pm, Town Hall — Town Council Meeting with first reading of WEX Credit Enhancement Agreement.
>>> Wednesday, February 5, Town Hall – Public hearing on the WEX deal.
>>> Wednesday, February 19, Town Hall – Town Council Meeting with second reading/approval of the WEX Credit Enhancement Agreement.
If you haven’t already signed up for the SMARTaxes newsletter, please consider doing so since they will undoubtedly follow developments on the WEX tax break. To be added to the newsletter mailing list, just send an email requesting it to email@example.com.
Other developments that will scare your socks off
In the scheme of things (and there is a lot of scheming going on), it turns out that the WEX tax break barely registers on the Taxpayer Concern Meter (the “TCM”). In our next fun-filled issue, we’ll bring you up to speed on three huge projects that are all jockeying for a major claim on your disposable income… if there’s any left.
Community Center/Pool – The ad hoc committee that was convened to make an emergency evaluation of the Downs’ community center lease offer will make its report to the Town Council within the next 2-3 weeks. Incredibly, they will recommend that we continue considering the Downs’ lease proposal in spite of the fact that its 30-year lease cost for the building itself is $36 million more than the estimated cost if we build the same building ourselves and issue debt — $90.6 million in lease payments versus $54.2 million of debt payments if we build it ourselves. Apparently there are lots of “intangibles” that need to be considered.
Library Expansion – Somehow the cost estimate for the library expansion leaped from $8 million to $14 million in a few short weeks. Things move fast in Scarborough! But remember, it’s “the library’s turn” in the long-range capital plan.
New primary school – We’re not sure if this is going to be a K-2 (Kindergarten through second grade) school or a preK-3 (pre-Kindergarten through grade three) school or somewhere in between. But we do know that the cost estimates keep growing. We now look back wistfully at the initial estimate of around $60 million. Now an amount of $80 million gets bandied about. Or more.
Seems like it will be a head-spinning year in Scarborough!
That’s all for now, folks! We’ll try to keep you up-to-date. In the meantime…
(nom de blog of Steve Hanly, who is solely responsible for the content of this blog)